Paypal Holdings Inc (NASDAQ: PYPL) Investor Securities Class Action Lawsuit 12/28/2016
December 28, 2016 - An investor in shares of Paypal Holdings Inc (NASDAQ: PYPL) filed a lawsuit in the U.S. District Court for the Northern District of California over alleged violations of Federal Securities Laws by Paypal Holdings Inc, eBay, Inc., and certain of the companies’ officers in connection with certain allegedly false and misleading statements.
PayPal operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. It enables businesses of various sizes to accept payments from merchant websites, mobile devices, and applications, as well as at offline retail locations through a range of payment solutions. The company's platform allows customers to pay and get paid, transfer and withdraw funds to their bank accounts, and hold balances in their PayPal accounts in various currencies. Between 2002 and 2015, PayPal operated as a subsidiary of eBay, Inc.
In 2013, PayPal acquired the payment service provider Braintree, owner of the mobile payment service Venmo. Describing itself as a “digital wallet,” Venmo is a mobile payment service that allows its users to transfer money to one another after providing Venmo with personal and bank account information necessary to create a user account.
On September 30, 2014, eBay, Inc announced that it would spin off Paypal and its services, including Venmo, into a separate publicly traded company.
In July 2015, the companies completed the spin-off, pursuant to which each holder of eBay, Inc common stock as of the close of business on July 8, 2015 received one share of Paypal Holdings Inc common stock for every one share of eBay, Inc common stock held.
The plaintiff claims that the Defendants made false and/or misleading statements and/or failed to disclose that Paypal Holdings Inc’s Venmo service was engaged in unfair trade practices, that the foregoing facts, when they became known, were likely to subject the Company to increased regulatory scrutiny and/or affect the profitability of Paypal Holdings Inc’s Venmo service, and that as a result of the foregoing, Paypal Holdings Inc’s public statements were materially false and misleading at all relevant times.
On April 28, 2016, Paypal Holdings Inc reported its financial results or the quarter ended on March 31, 2016. Among other things, Paypal Holdings Inc disclosed that it received a Civil Investigative Demand (“CID”) from the Federal Trade Commission (“FTC”) as part of its investigation to determine whether Paypal Holdings Inc, through its Venmo service, have been or are engaged in deceptive or unfair practices in violation of the Federal Trade Commission Act. Paypal Holdings Inc said that the CID requests the production of documents and answers to written questions related to its Venmo servicem and that the CID could lead to an enforcement action and/or one or more consent orders, which may result in substantial costs, including legal fees, fines, penalties, and remediation expenses and actions, and could require Paypal Holdings Inc to change aspects of the manner in which it operates Venmo.